Does Means-Tested Welfare Affect Family Formation?

Do the marriage penalties of the welfare system have effects on family formation? According to a 2016 AEI/IFS report, the evidence is mixed:

Our data show that the presence of marriage penalties does not affect marriage patterns among unmarried couples in urban America who have just had a baby, or among couples with children two and under whose income falls close to the lower threshold of the marriage penalty facing such couples, that is, for couples whose joint income is close to a level where they would still qualify for means-tested benefits were they to marry. Most in this latter group are in the lowest two quintiles of family income for families with children two and under (less than $48,000). We also find no evidence that marriage penalties associated with Temporary Assistance to Needy Families (TANF) reduce the odds of marriage among lower-income couples.

However, we do find that couples whose oldest child is two or younger whose income falls closer to the upper threshold of the marriage penalty—couples where each partner’s individual income is near the cut-off for means-tested benefits—are about two to four percentage points less likely to be married if they face a marriage penalty in Medicaid eligibility or food stamps. Most of these couples are in the second and third quintiles of family income for families with children two and under ($24,000 to $79,000).

Almost one-third of Americans aged 18 to 60 report that they personally know someone who has not married for fear of losing means-tested benefits.